How Vodafone’s Chatbot Technology Is Helping It Cut Jobs

Loknath DasFebruary 9, 2019TechnologyComments Off on How Vodafone’s Chatbot Technology Is Helping It Cut Jobs

Vodafone, like any other storied telco giant today, has been urgently seeking ways to trim costs. Not only are its revenues under pressure from smaller upstarts in Spain and Italy, it must also spend heavily on upgrading its network infrastructure to handle faster, 5G data speeds.

One cost-cutting idea that Vodafone has chased is to automate certain internal tasks carried out by staff with simple bots and, in some cases, more sophisticated chatbots. The painful result is fewer people on payroll. Vodafone has, for instance, deployed so-called “robotic process automation” bots to automate back-office tasks like data entry. As a result, Vodafone said that in the first half of 2018 it laid off 900 people.

Vodafone uses similar technology to automate the telephone conversations its service agents normally have with customers. Today, only around 1% of its customers talk to a chatbot for simple tasks like changing an address or payment details. But Vodafone wants to bring that number up significantly, to 60% by March 2021. That means more job cuts are likely on the way.

A graphic from Vodafone’s 2018 annual report. IMAGE VIA VODAFONE

Experts in technology and economics often disagree on whether the spread of artificial intelligence will hurt jobs in the long run. But in the short term, such software is helping Vodafone cut staff numbers, and staff cuts are also how the company is defining the software’s success, according to one vendor.

“Vodafone has been explicit to this. The number of FTE’s, the number of full-time equivalent employees that have been reduced.”

Vodafone licenses chatbot software from several companies, one of which is New York-based IPSoft. That company’s flagship product is chatbot software called Amelia, also used by Sweden’s SEB Group and insurer AllState. AllState has said average call-center times decreased after using the software.

Vodafone has been using Amelia for more than two years, says Jeff Heenan-Halil, the European CEO of IPSoft. As is often the case, Vodafone trialed it internally first, inviting staff to try chatting to the Amelia bot if they had an IT problem or query for HR.

By December 2018, Vodafone’s staff were holding 25,000 chats a month with Amelia, Heenan-Jalil said in an interview with Forbes, and Amelia was able to resolve half of those queries. Around 58% of all staff queries to Vodafone’s IT helpdesk went through the bot, Karine Brunet, Vodafone’s former director of Technology Shared Services revealed in a speech in the summer of 2018.

Now Vodafone is pushing the same software out to its customers under a different name, TOBi, pictured above as a smiling cartoon. Forbes made two attempts to make “live chat” enquiries through Vodafone’s app and in both cases spoke to human customer-service agents who were based in Newbury, U.K.

When Forbes asked one human agent if Vodafone used chatbot software for some enquiries, they said yes. Customers would sometimes get connected to the bot if all human agents were busy.

A conversation with a customer service agent on Vodafone’s app.PARMY OLSON

Vodafone has “thousands of people in customer-facing activities,” a spokesman says. But in the next few years, many of these agents will likely lose their jobs as TOBi, which is currently available in five countries and heading to five more in 2019, becomes more sophisticated.

When asked how Vodafone measured the success of the chatbot software it had licensed from IPSoft, Heenan-Jalil said, “Vodafone has been explicit to this. The number of FTEs, the number of full-time equivalent employees, that have been reduced.”

“FTE roles” is how Vodafone referred to the 900 layoffs in its November 2018 trading statement. Vodafone now had a “target” to reduce 180 employees, “which we will achieve by March of [2019],” Heenan-Jalil added.

When Forbes asked a Vodafone spokesman to confirm that it graded TOBi based on staff cuts, he replied that it used a variety of metrics, including customer interaction times and a Net Promoter Score that grades a customer’s experience, “which has significantly improved as a result.”

When asked how many human customer service agents had been laid off as a result of using TOBi, the spokesman did not directly answer, saying, “Taken as a whole, Vodafone’s customer service workforce has not been laid off as a result of implementing TOBi.”

The spokesman could not be reached email or phone to clarify his answer. Heenan-Jalil also did not respond to multiple requests for further comment.

Chetan Dube, the CEO of IPSoft, described Amelia as a form of digital labour, and said the product had been responsible for $250 million in product revenue for IPSoft in 2018. IPSoft has been backed by two family trusts for the past 20 years, who own 99% of the company, said Dube.

Dube admits that there are “polarized views” on AI but says businesses are obligated to use new software to find efficiencies. “I’ve been privileged enough to speak to CEOs of other institutions, and I’ve yet to meet a single one saying ‘I can have 45% margin enhancements with digital agents, versus 35% margin compression if I don’t,’” he saidin an interview. “The question we should be asking is: Do we have a choice?”

Chatbots were the subject of much hype a few years ago, as they heralded a path to how humans would interact with machines in the future. Many companies invested in the technology, but many also found it was not commercially viable.

“Chatbots have failed commercially,” says John Taylor, the CEO of Action AI, a British startup that sells conversational software for banking and business travel. “If anyone can name a single commercial chatbot that’s delivered a return investment, that would be the first one I know of.”

Taylor says it’s challenging to manage his customers’ expectations, after the “aspirations and objectives that have been set out by all kinds of large companies and tech leaders.” He added that it was generally easier to sell chatbot software to companies who don’t experience much customer churn, such as banks and telecom companies, where customers are more likely to put up with mediocre customer service because switching providers takes time and effort.

That doesn’t apply to all in that category, though. Nordic bank Nordnet launched Amelia in 2017 to help speed up the on-boarding of new customers and improve customer satisfaction, according to Nordic Business Insider, which cited Dagens Industri, a Swedish-language financial newspaper. “We have tried it towards customers, and the response is ok, but not overwhelming.” Nordnet’s CEO Peter Dahlgren told the paper.

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